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Why It's Worth Betting on Palomar Holdings (PLMR) Stock Now

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Palomar Holdings, Inc. PLMR is well-poised for growth, driven by a higher volume of policies written, rate increases and positive cash flows.

Growth Projections

The Zacks Consensus Estimate for Palomar’s 2022 earnings is pegged at $2.94, indicating a 43.4% increase from the year-ago reported figure on 49.5% higher revenues of $368.5 million. The consensus estimate for 2023 earnings stands at $3.76, indicating a 27.9% increase from the year-ago reported figure on 35.5% higher revenues of $499.5 million.

Estimate Revision

The Zacks Consensus Estimate for 2022 and 2023 has moved 2.4% and 5.6% north, respectively in the past 60 days. This should instill investors' confidence in the stock.

Zacks Rank

Palomar currently carries a Zacks Rank #2 (Buy).

Return on Equity (ROE)

Palomar’s trailing 12-month return on equity (ROE) was 14%, which expanded 1150 basis points year over year. ROE reflects its efficiency in using its shareholders’ funds.

Style Score

Palomar has a favorable VGM Score of B. VGM Score helps identify stocks with the most attractive value, best growth and the most promising momentum.

Business Tailwinds

Higher volume of policies written across its lines of business, owing to new business generated with existing partners, strong premium retention rates for existing businesses, expansion of distribution footprint and the execution of new partnerships across multiple lines of business should drive premium growth. Rate increases for commercial products are also likely to add to the upside.

Higher policies written through its internal managing general agency, Palomar Insurance Agency are expected to boost the commission and other income of the insurer.

By virtue of higher average balance of investments, investment of cash generated from operations as well as higher yields on invested funds, investment income is likely to improve.

Riding on improved premium growth, commission and other income as well as higher investment income, the top line of Palomar is expected to benefit.

The solid growth of Palomar’s core products, including earthquake and Hawaii Hurricane, along with the successful scaling of Palomar Excess and Surplus Insurance Company, PESIC should also contribute to top-line growth.

Palomar has generated positive cash flows from operations over the past years. Also, its growing cash and cash equivalents indicates that the insurer has sufficient cash reserves to ensure financial stability. PLMR boasts a debt-free balance sheet.

In the first quarter of 2022, the board authorized a new two-year share repurchase program, with authorization to repurchase up to $100 million in shares.

The stock has gained 1.1% compared with the industry’s increase of 13.7% year to date.

Zacks Investment Research
Zacks Investment Research


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Other Stocks to Consider

Some other top-ranked stocks from the insurance sector are Cincinnati Financial Corporation CINF, United Fire Group, Inc. UFCS and Kinsale Capital Group, Inc. KNSL, each currently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The bottom line of Cincinnati Financial surpassed earnings estimates in each of the last four quarters, the average being 38.48%. Year to date, the CINF stock has rallied 21%.

The Zacks Consensus Estimate for Cincinnati Financial’s 2022 and 2023 earnings has moved 5.7% and 5.5% north, respectively, in the past 60 days.

United Fire’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 275.45%. Year to date, UFCS stock has rallied 27.3%.

The Zacks Consensus Estimate for UFCS’ 2022 and 2023 earnings has moved 122.2% and 76.9% north, respectively, in the past 60 days.

Kinsale Capital’s earnings surpassed estimates in each of the last four quarters, the average beat being 32.04%. Year to date, Kinsale Capital has declined 1.1%.

The Zacks Consensus Estimate for Kinsale Capital’s 2022 and 2023 earnings has moved 5.9% and 8.2% north, respectively, in the past 60 days.


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Cincinnati Financial Corporation (CINF) : Free Stock Analysis Report

United Fire Group, Inc (UFCS) : Free Stock Analysis Report

Kinsale Capital Group, Inc. (KNSL) : Free Stock Analysis Report

Palomar Holdings, Inc. (PLMR) : Free Stock Analysis Report

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